Discontinued Operations

6 Months Ended

Jun. 30, 2011

Discontinued Operations [Abstract]

Discontinued Operations

 (6)  Discontinued Operations –

On November 30, 2008, the Lease term expired for the Red Robin restaurant on Citadel Drive in Colorado Springs, Colorado.  The tenant reviewed their operations at the property and decided not to enter into an agreement to extend the term of the Lease.  The Partnership listed the property for sale with a real estate broker in the Colorado Springs area.  While the property was vacant, the Partnership was responsible for real estate taxes and other costs associated with maintaining the property.  During 2010, based on marketing efforts and an analysis of market conditions in the area, the Partnership determined the former Red Robin property was impaired.  As a result, in the third quarter of 2010, a charge to discontinued operations for real estate impairment of $200,000 was recognized, which was the difference between the carrying value at September 30, 2010 of $900,000 and the estimated fair value of $700,000.  The charge was recorded against the cost of the land and building.

Since December 31, 2007, the former Red Robin property has been classified as Real Estate Held for Sale.  After marketing the property for sale for several years without success, the Partnership entered into an agreement, effective June 20, 2011, to lease the property to a local restaurant operator. The Lease Agreement has a term of two years with annual rental payments of $100,000.  The tenant plans to remodel the building and convert it into a Chinese buffet restaurant. As a result of this agreement, the property was reclassified to Real Estate Held for Investment as of June 30, 2011. In addition, the operating results of the property, which were previously reported in Discontinued Operations, were reclassified to Continuing Operations for the periods presented.  Since the Partnership valued this property at fair value at June 30, 2011 and this amount is less than the carrying value at December 31, 2007 less catch-up depreciation of $120,666, no additional depreciation expense was recognized as a result of the reclassification.

In January 2011, the Partnership entered into an agreement to sell the Applebee’s restaurant in McAllen, Texas to an unrelated third party.  On March 10, 2011, the sale closed with the Partnership receiving net proceeds of $1,618,981, which resulted in a net gain of $776,219.  At the time of sale, the cost and related accumulated depreciation was $1,320,104 and $477,342, respectively.  At December 31, 2010, the property was classified as Real Estate Held for Sale with a carrying value of $842,762.

On March 16, 2011, the Partnership sold its remaining .2706% interest in the Champps Americana restaurant in Columbus, Ohio to an unrelated third party.  The Partnership received net sale proceeds of $8,299, which resulted in a net gain of $1,589.  The cost and related accumulated depreciation of the interest sold was $9,330 and $2,620, respectively.

During the first six months of 2011 and 2010, the Partnership distributed net sale proceeds of $117,041 and $133,381 to the Limited and General Partners as part of their quarterly distributions, which represented a return of capital of $5.31 and $6.00 per Limited Partnership Unit, respectively.  The Partnership anticipates the remaining net sale proceeds will either be reinvested in additional property or distributed to the Partners in the future.

The financial results for these properties are reflected as Discontinued Operations in the accompanying financial statements.  The following are the results of discontinued operations for the periods ended June 30:

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Rental Income	$	0		$	60,531		$	45,582		$	121,061
Property Management Expenses		(1,392	)		(2,714	)		(1,392	)		(2,714	)
Depreciation		0			(6,609	)		(44	)		(13,218	)
Gain on Disposal of Real Estate		0			0			777,808			0
Income (Loss) from Discontinued Operations	$	(1,392	)	$	51,208		$	821,954		$	105,129